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Minimum Wage Increase - Just Proposal?

President Obama and Harry Reid want the federal minimum wage level to rise to $10.10 per hour within 3 years. Whatever else is the case with such a proposal, such as whether they are doing if for political reasons only (pandering to their base, for example), the merits of the proposal itself should be discernible. And, indeed, the Congressional Budget Office (supposedly neutral scoring agency that is supposed to tell us what the likely result of bills like this will be) has said what we should expect from a bill like this. It short, it would raise about 900,000 families above the federal poverty line, and hit about 500,000 low-wage workers with losing their job. The increase would also impact low-wage workers in high-income families: about 35% of the people benefiting directly from the wage hike would be in this class, whose family income is 3 to 6 times the poverty line.

Is that just?

I know that a minimum wage law has all sorts of arguments for and against, all sorts of goods and ills attached, touches on all sorts of bedrock principles. For the moment, let's set aside those more remote questions. In point of fact, we do actually have a federal minimum wage law, and we aren't feasibly going to get rid of it within the foreseeable future. We also don't know to what extent the CBO made unwarranted assumptions for their analysis, but they are charged with being neutral and there are a lot of smart people that work on these questions, so let's postulate for the moment that their estimates are plausible and within the realm of reasonable conclusions. Within that context, is THIS proposal a just law?

Well, that kind of begs for another kind of question: what would be the right criteria in order to decide whether it would be a just law?

One criterion might be: (1) does this improve the net wealth of the country as a whole or reduce it?

Another might be: (2) does this improve the ability of the poor to participate successfully in the economy?

A third might be: (3) does this help more people than it hurts.

According to CBO, this law would have the net effect of slightly raising the net worth of the economy in the short term, and slightly lowering it over the long term. So, to score this fairly, I would say that the answer to (1) is that this law does not raise the net wealth of the country as a whole, it reduces it. Why? Because the long term effect is the one that LASTS LONGER, and therefore has more overall impact. In this case, I believe the meaning of "long term" is, effectively, the permanent effect after the first few years.

As for (2), apparently this law would significantly benefit about 16 million workers, but about 6 million are already in higher income families (6. million are in families with total income at the 3 to 6 times poverty line. The portion whose wages are raised increases to 51% of lower-wage earners that are in families at the double or more of the poverty line), so it will have a very notable impact on about 10 million, and will raise about 900,000 above the poverty line. At the price of dropping about half a million currently employed out of their jobs. So, there is no way of saying simply yes or no: it enables some to participate more successfully in the market, it disables others from doing so. The some that it helps are a lot larger a group than the ones that it hurts like this, but the scale of help to hurt is also out of proportion: it increases the family income of the lower-wage earners by a modest amount (about 2.4%), it decreases the income of those out of a job by a catastrophic amount.

The third is probably a terrible way to ask the question. After all, it will benefit more people than it will hurt if we take my neighbor's house away from him, sell it, and split the proceeds among the 20 other families on the street. That doesn't tell us whether that benefiting more people than it hurts is a good thing or a bad thing, just or unjust. Nevertheless, if the increased wages directly help about 16 million, and another 10 to 15 million just above the $10.10 range also get their wages increased, that more or less implies many of the other 120 million workers see little change or have their gross receipts drop. But of course, 6 million of the 16 million getting their wages increased directly are ALREADY in families at 3 to 6 times the poverty level. CBO indicates that 65% of families are in the 3 times poverty level and above, and that these families will see no benefit or a drop in income from the law. Probable answer to number (3) is that this hurts more people than it helps, or comes out close to even. Though, of course, it helps poor people and hurts the (relatively) better off.

If those 3 questions were the best way to ask whether this law is good policy, the answers indicate that it would be hard to say that it is a good law. But I didn't really ask whether it was a good law being proposed, I asked whether it was a just law. To answer that, the 3 questions above don't really get at the issue. Number 3 should be the dead give-away clue for that - all sorts of things that are unjust could help more people than they hurt.

There is more than one kind of justice that the state must consider. One of them is commutative justice. For commutative justice, the state's role is that of a referee: the realm of commutative justice is that of citizen to citizen, and in each action the two parties ideally give and receive what is due from the one to the other in the specific context of their relationship. The state's role is to enforce that each carries out the obligations each owes to the other. The main way it does that is to enforce contracts - to make sure nobody says they will do X, and then reneg on the deal and not come through with the agreement to do X. Secondarily, the state has a role in making sure contracts are not unjust to begin with: outlawing some contracts (like slavery, or prostitution which is a sort of short-term slavery), and determining certain kinds of behavior for transparency so that the realities that underlie the agreements are known to both parties reasonably, and so on. The state is supposed to be a secondary actor, (contrary to Obamacare), not MAKING the contracts but telling the parties to make just contracts and to enforce them. Though contracts are not the only ways in which the citizens are related to each other: child to parent, friend to friend, etc. In all of these, the relationship is between members of the state but not primarily by reason of the state, and the state's business isn't really to construct the relationship or determine that A must choose to take on a relationship to B, but to make sure such relations and activities do not exceed norms of just behavior, where what is just is determined by other considerations than "what does the state want".

Another area of justice is different. The state has a primary role in in a form of social justice that it doesn't have in commutative justice. For example, it belongs to the state fundamentally and primarily to dole out legal honors to those whose actions deserve honor, and punishments to those who offend against the law or honor. This pertains to the polity's relationship to the members thereof, not principally between two members of society. Especially with regard to official, legal honors, this is something that belongs to society considered as a whole, not to any individual, and belongs to the state to assign on behalf of society. While it is unjust for the state to knowingly assign honors to A instead of B when the officials know for certain that A in not worthy of them and B is, nobody has a RIGHT to such honors as such, and it is not precisely B so much as society as a whole who is harmed by such unjust dealings. (If B is a soldier who did an extremely noble act of self-sacrifice but nobody knew about it, B has not suffered a loss of just deserts when the state doesn't award him honors). Likewise, if the state knowingly gives C a just punishment for a crime but withholds from D, his co-conspirator, the equal punishment, it is perhaps an injustice but not precisely an injustice to C, but rather to the whole polity.

Some people propose that there is a third kind of justice that the state must concern itself with, which is that goods be distributed justly. And this is the sort of justice that regards the minimum wage law. I hesitate to introduce this type into the discussion, because I have yet to hear someone suggest a criterion by which "distributed justly" actually makes sense. Some say "evenly", but they don't actually mean it. But we have to put this on the table, as it forms a significant element of what people think they mean when they are talking about "justice" and the state. So, looking at these 3, I ask again, what is the right criteria for deciding whether raising the minimum wage to $10.10 would be a just law? Is it merely

(4) Do the poorer have closer to the average while the richer also get closer to the average?

If that is the criterion of the sort of justice that the state must observe and attend to, then what is to prevent the state from simply taking EVERYTHING above the average away from the rich and distributing it to those who have less than the average? That, too, will achieve "justice". Or, for that matter, the state taking everything from all who are richer than the poorest, down to the level of holdings of what the poorest have right now, and simply destroying it? That will provide a "yes" answer to (4).

And, is there a specific reason that this sort of justice applies at the level of the government and not lower down?

To see what I mean, let's bring the question into a smaller scale. Suppose we have a medium-sized firm that employs 150 people, whose incomes reflect the national picture. The CEO looks over the wages of everyone, and decides that things need to be adjusted - the lowest earners need to earn more. So he calls all of the employees together and says the following: "I am going to re-vamp the wage picture. I am going to take a salary decrease, as will my 2 vice-presidents. Most of the other 10 high-wage people will see a half-percent drop as well. My estimate is that if I make deeper cuts than that we will lose critical skills to our product lines and will not keep operating well. The lower-wage earners will have their wages increase to $10.10 per hour, and some of the next rung up will see increases as well. However, we are going to have to let one of you go. I will allow the 30 lowest wage earners to vote on who among them gets released."

You can imagine most of the 30 lowest expostulating: "Hey, that's not fair! We don't want to be thrown into some lottery of being laid off. " And for the 4 or 5 of the 30 who are either least experienced, least popular, or dumbest and simply incapable of as high output as their semi-peers, they may say: Please! Don't do us any favors, just leave things the way they are."

The question isn't whether the CEO has the right to do this, the right to let go someone who probably isn't earning the company what the company is paying him. The question I have is, is it in accordance with the virtue of justice for the other 29 lowest-paid workers to be satisfied with their increase, knowing that their benefit came partly at the cost of the poor sod who got let go? Does that sit right with a just society? What kind of justice is it that aims at that sort of outcome? Would the virtuous, just-minded low-paid worker prefer to say "Hey, boss, can we just let things alone and keep everyone on the payroll?" Why or why not?

Comments (34)

It short, it would raise about 900,000 families above the federal poverty line, and hit about 500,000 low-wage workers with losing their job.

I would make an educated guess that many of those 500,000 workers would be in states that are already poorer than the ones likely to benefit. My assumption is that a raise that high would be mainly disruptive in those parts of the country where a sudden shift of about $2.00 to $2.50/hr on the minimum wage would be a substantial increase over the prevailing wages for people in that category. Those areas would likely be poorer than most. So this is likely to benefit workers in higher income areas where the jump might be from $9 to $10.10 hour instead of where it is now ($7 something)? So basically it's a redistribution from the poorer workers in poorer regions to the poorer workers in richer regions.

Those who support minimum wages even in light of the down sides that are commonly accepted also seem to not care that $10.10 may be fair in a big city, but unacceptably high for the same worker in a small town. Suppose there really was a case for minimum wage laws, and in places like San Francisco (where houses there make houses in DC look cheap) there could well be one. It would make more sense to localize the minimum wage law otherwise the end result would likely be a one size fits all that truly doesn't help any group more than it hurts. The worker in small town California's needs are simply not relevant to policy decisions in San Francisco and should not be lumped in with theirs. $15-$20 may be necessary in San Fran whereas that'd be wildly ridiculous in most of the country.

I'll say this, the workers I knew living on minimum wage in small town Virginia lived comfortably; the ones in metro DC that I see probably not so much. A single man in small town Virginia can live on minimum wage and get a $500/month apartment with a roommate and squirrel away money if he's responsible. Don't even try that in a bigger city.

Given the wide variation in cost of living in different locations, it is inevitable that a broadly applied minimum wage will fall very unevenly on different groups. Which is, rather, contrary to the whole point of using a law to force an equality that the market cannot achieve on its own.

Nevertheless, proponents can claim that those places with unusually high costs of living need their own minimum wage law that raises the bar above the national minimum. And indeed that has happened to some extent: about 21 states have laws that raise the bar above the federal level. Washington State is the highest, at $9.32, though Calif's is scheduled to raise to $9 next year and $10 the following.

I think that it is certain that since individual states are CLEARLY happy to set their own level higher when they think their particular conditions warrant a rate above the national, setting in a new national level that is higher than EVERY SINGLE STATE minimum wage law currently provides is grotesquely out of line with real economics. It is utterly irrational to suppose that the WHOLE damn COUNTRY failed to notice that they were setting their rates too low, INCLUDING the whippy dippy hippie liberals in Sacramento and Seattle. There is no way in the world that this Obama-Reid proposal is cognizant of economic reality. The nicest thing that can be said of it is that they knowingly set the level too high, to create negotiating space to give in to the RINO Republicrats so they can save face while "containing" the increase to only $9 or something like that.

But none of that really speaks to my question here. I would like to understand what it is that liberals think this proposal is the answer to in terms of whether a law like this is just? What are the criteria that they have in mind when they try to answer that question. On what standard of justice is it that they are OK with killing the jobs of 500,000 people who are currently either getting by or making a decent stab at it?

I misread your post to read that it was going to create 900k jobs. If all it does is increase the value of the jobs supporting 900k people at the expense of 500k employed people's jobs that's a redistribution whose nature is close enough to theft to condemn it.

From a collective POV, the biggest issue here is that this is likely to further institutionalize poverty because it'll likely hit the poorest parts of the country the hardest. For Appalachia to lose even 2% of its minimum wage jobs is substantially more burdensome than for a rich urban area to lose that many because the community simply doesn't have enough wealth to absorb the cost of the policy.

For the past three months I have been trying to write a story about my beautiful island called Utila down here in Honduras. While doing research on the web I came across your comments on What´s wrong with the world. Mike´s post on March 18, caught my eye- his use of the Word utilitarianism jumped from the screen at me since my book is about the strengths the betrayal and the demise of yesteryear utilians. If anybody would like to read a Little bit of this book, I´ll be more than happy to send it to you.

Mike, I agree with you but only to some extent. You see, many people in our world do not realize that entire countries holds a debt to other countries in our world and those debts has to be paid back somehow or another. In our country, (the US) thanks to our Holy Grail - the Constitution of the United States¨ there is nothing stopping folks from coming together and agree on a mutually, yet ethical and legal way to call the debt even and move on. But let us not forget human nature man is a beast and he will go to the ends of his own being to get what is his- it´s in all of us
What our president is doing makes good sense and I agree with him in a utilitarian kind of way but what is lacking in this bill I think- is a mandate along with it for educating the public with regards to how this new law is going to affect everyone.
As a born and bred utilian, I can assure you, both the debtor and the debtee will find a way to resolve the matter. And let us not also forget that all of the religions in our country and the world has a role to play and pay for their actions in the process. After that, let nature and destiny take it´s course. This is just my opinion on the matter.

The problem I have with this proposal is that it is a blatant redistribution from one class of poor to another. No matter how you cut it, you are badly hurting those who rely on the lost jobs and it's not even remotely obvious that there is any moral good in hypothetically distributing that income to other workers. It's rather easier to argue that it's immoral since you're doing a fancy form of robbing Peter to pay Paul. However, to most utilitarians it is passable as a proposal because it benefits more than it harms.

I misread your post to read that it was going to create 900k jobs. If all it does is increase the value of the jobs supporting 900k people at the expense of 500k employed people's jobs that's a redistribution whose nature is close enough to theft to condemn it.

Well, that's not quite what the 900,000 number is. About 16 million will have their incomes raised up to 10.10 per hour, and another 10 million or so will have their already better-than-10.10 incomes raised up a bit in response. That's about 25 million who will "benefit" in some sense. Of those, about 900,000 FAMILIES will see their total family income rise above the poverty level. Presumably the others of these 25 million either are already IN families whose total income is above poverty level, or the 10.10 level won't be enough to raise the whole family above poverty level.

The 500,000 isn't, quite a straight 500,000 who will be kicked out of their jobs. It is 500,000 FEWER jobs, of which some portion (I think) represent jobs that would have been created had this law not passed, but a share will of course be jobs directly cancelled. I am not sure how much it matters which group you are in, but somebody may say it matters.

Watcher, our country (the United States) is vastly in debt to other countries, especially China, Japan, oil exporters, etc. But however well or ill the debt issue plays out, that cannot but be a very minor issue on the utility of the minimum wage increase, much less the justice of choosing to help some of the poor on the backs of other poor people. For instance, there are plenty of poor people who have no debt, in part because they cannot get credit. Resolving debt issues can affect them only incidentally.

Minimum wage raise proposals arise from a failure to understand basic TANSTAAFL. And TANSTAAFL, in turn, is simply an expression in the economic realm of a much older principle: Ex nihilo nihil fit.

Proponents of minimum wage raises can never answer a fundamental question: Why should we not increase the minimum wage to $100 per hour and magically make everyone rich? This has always seemed to me a very fair reductio. If you really can make people better off by fiat, by raising the number of dollars that you declare must be paid to them for their labor, why not just eliminate poverty and usher in utopia at one fell swoop? Instead, their piddling $10 minimum wage proposals are just ways of making them feel psychologically that they have "done something" while keeping the negative effects of the policy down far enough and widely enough spread that they don't have to acknowledge it to be a colossal failure and that it doesn't actually crash the economy altogether.

Tony,
I am sooooooo aware that we have a debt. There is not one person on planet earth who does not carry a debt of some kind- be it material or barter. My point is Leaders and representatives whom we have chosen to speak and represent us in circles like the economic tables of the world has an obligation to make maneuvers’ and decisions’ that is in the best interest of everyone on the face of the earth, not just some of us on the face of this earth. We as a free world-need to pay attention to the maneuvers´ they make and we need to make sure that everyone understands their share of the consequence for having accepted what is being proposed.
Let us not forget, we all hold different values in the world and we do not all think alike. Our debt is very real and it does not only affect folks living in the US. I am a US citizen but I live in Honduras and I have a sisters who are US citizens and lives in Japan, Europe, Africa, Israel and China. It affects the world.
Have you ever heard the saying when the US sneezes, the whole world catches pneumonia? Well, it´s true. I simply said, lacking in this bill- I think- is an education mandate for educating the public with regards to how this new law is going to affect everyone. Again- thinking utilitarian, I think educating the public is one step to solving this issue before accepting or demonizing these proposals. Who knows, our debtors might just say hey, lets´´ just forget this ever happened and then what? )))))

It is true that the minimum wage helps to price some jobs out of the market, but that doesn't mean its overall economic impact is negative. That's only true if you have a very limited conception of economic benefits. The best thing the minimum wage does is help guarantee that those who do work enjoy a decent standard of living, and as long as the number of people that are put out of work by its existence is not too great I think that outweighs the harms. It certainly beat a society in which people work and live like paupers...having a job is good, but for most Americans working is a means to end, not an end in and of itself.

It is true that the minimum wage helps to price some jobs out of the market, but that doesn't mean its overall economic impact is negative. That's only true if you have a very limited conception of economic benefits.

I think Tony's point is whether or not it is just to impoverish one group of workers in order to raise the standard of living of another. That's a separate consideration from whether or not the minimum wage hike is overall good for the economy.

Stopping inflation and even imposing some controlled deflation would be better for workers than raising the minimum wage. It really doesn't matter what amount of raw dollars a worker is paid. What matters is the buying power of the wage. Our approach of chasing the minimum wage upward is really just a race to the bottom because we won't face up to the fact that the Federal Reserve is a complete failure at controlling inflation and has in fact done a lot to encourage it despite having a mandate to control it.

The best thing the minimum wage does is help guarantee that those who do work enjoy a decent standard of living, and as long as the number of people that are put out of work by its existence is not too great I think that outweighs the harms.

Dunsany, in a certain sense I agree with you: in some things, an outcome where many are better off from what you do, and a few are worse off because of what you do, is an OK sort of situation. It is precisely how we approach the principle of double effect and "the lesser of two evils" situations.

But NOT ALL such: not when the few who are worse off because I have done something inherently wrong to them. I cannot take away my neighbor's house from him, sell it, and spread the proceeds between 50 people on the basis that 50 helped is better than one person hurt: taking away his house isn't just no matter how many are helped thereby, if the only reason I have for taking it away is "because it will help more than it hurts". You have to have another reason, BESIDES "that it helps more than it hurts" to justify taking away his house.

So, what is it that makes you sure that taking away 500,000 jobs from people who are now working is a just act, if the only reason is "because it helps more than it hurts?" It's not that I think that the overall result isn't a net economic good - at least temporarily, CBO says that it probably is. It's that saying that it is a net economic gain doesn't help tell us whether it is just, because the two are under different criteria.

So, again, what criteria should we use to understand whether doing this is just or not?

help guarantee that those who do work enjoy a decent standard of living,

Well, again, that's not really what the law does. For some, it raises them out of deep poverty into shallower poverty. For some it raises them out of shallow poverty into modest comfort. For everyone who keeps working, it helps in the direction of a decent standard of living, but it doesn't guarantee it for ALL of them. Especially not the ones who are supporting a wife and 2 kids, for example.

So, if the basic criterion is "does it move people in the direction of a decent standard of living", then why not raise the minimum wage to $25 and make sure 99.9% of workers will get a decent standard of living? Well, of course, the long term effect will be just to raise expenses as well, so the boomerang effects in the marketplace won't raise everyone to that level and keep them there. But THAT's just as true of a $3 raise: it is inherently a short-term improvement, followed by (according to CBO) a net drag on the economy. In reality, raising the minimum wage is a large act of causing future inflation, which has all sorts of complex and negative effects, some of those negative effects harm the poor more than they harm the well-off, and it isn't really all that simple to say that raising the minimum wage helps the poor full stop.

I don't recognize property rights in the same sense you do Tony. Even Nozick knew that the Lockean conception of property rights collapses once you understand that the existing distribution of property was created by a series of transfers Locke and his followers would consider unjust. There is absolutely no reason to think people have a right to their property in a hard sense.

"o, if the basic criterion is "does it move people in the direction of a decent standard of living", then why not raise the minimum wage to $25 and make sure 99.9% of workers will get a decent standard of living?"

Because that prices far more jobs out of the market.

" But THAT's just as true of a $3 raise: it is inherently a short-term improvement, followed by (according to CBO) a net drag on the economy. I"

This is very speculative, and I don't believe. Corporate profits have risen while wages have stagnated, so it obviously not true that corporations and other employers can't pay more without charging more; the fact that they are making more money than ever proves this is nonsense. Competition among businesses will do the rest.

I don't recognize property rights in the same sense you do Tony. Even Nozick knew that the Lockean conception of property rights collapses once you understand that the existing distribution of property was created by a series of transfers Locke and his followers would consider unjust. There is absolutely no reason to think people have a right to their property in a hard sense.

Dunsany, none of that answers the question of justice that Tony has put to you. Nowhere in his post does Tony even mention property rights, except by implication in his particular analogy (which you have also ignored) of neighborhood confiscation.

Corporate profits have risen while wages have stagnated, so it obviously not true that corporations and other employers can't pay more without charging more; the fact that they are making more money than ever proves this is nonsense.

Your categories are so hypergeneralized as to be meaningless. As a proportion of its labor force, how many minimum wages workers does a Wall Street bank employ? Now ask the same of Walmart. And yet both report corporate profits and pay careful attention to labor productivity. And both link profits to labor remuneration in different ways.

We would have to dig deep into the financials of numerous corporations, analyzing margins, earnings-per-share, debt to equity, etc., and then comparing them across various industries and regions, before we could even begin to assume what you breezily declare to be obvious.

Mike is also quite right to mention inflation, though I disagree with him when he says "the Federal Reserve is a complete failure at controlling inflation." There is a sense in which, since the passing of the acute crisis, controlling inflation is one of the few things the Fed as really succeeded at.

I don't recognize property rights in the same sense you do Tony. Even Nozick knew that the Lockean conception of property rights collapses once you understand that the existing distribution of property was created by a series of transfers Locke and his followers would consider unjust. There is absolutely no reason to think people have a right to their property in a hard sense.

Dunsany, I don't know what sense of property rights you think I recognize, because I haven't really explained it much. I suspect you are reading into my comments about other things a notion of property rights that is Lockean in some sense, but you are just guessing.

I don't recognize property rights in a Lockean sense, if by Lockean you mean that property rights arise by a social agreement to observe certain procedural rules of distribution and possession. I don't think that property arises by reason of agreement. Rather, I think that material property arises by way of principles that are logically (not temporally) prior to society, namely man's nature as rational and free, his capacity for self-direction, and his bodily reality. These make it RIGHT for a man to take hold of things for his good, to subject them to his dominion, and this rightness of action (expressed in dominion) is the essential foundation of his rightness of possession. That it is "right to do" something is what grounds his "right" to be not interfered with in pursuing the conditions to do something. The positive meaning of right in right moral action precedes and gives rise to the negative meaning of "right" in the social sense of not being interfered with. Social recognition of the latter condition is, precisely, consequential to the logically prior right which exists whether society notices it or not.

But Paul is right. Whether we have a fine or poor understanding of property in its foundation, we have a very good understanding that GIVEN the social state today, we cannot simply ignore the particular rules of the constructed social fabric that expresses who owns - or "owns" if you prefer - their property. Within that set of laws and customs, (as I set out at the beginning), we have to consider whether a jump of 29% in minimum wage is conformable to (a) the overall economic good, and (b) justice. Now, if you want to pretend that all property law is invalid and we need to ditch the whole shebang, you are arguing not for a 29% increase in minimum wage but for a total revolution, one that is even more far-reaching than the Russian Bolshevik one. A revolution that would, in fact, make an increase in minimum wage irrelevant because wages and everything like it else would cease to exist, after all the minimum wage is a law about the property rights that workers shall be granted. You cannot call it justice to choose SOME of the rules governing property rights and say "we will ditch those ones because property is an invalid social pretense" and then say of OTHER rules governing property "these ones we shall keep because they reflect a more just distribution of property rights." If we want to keep property law to have a law about minimum wage, we need to be just about it, and one aspect of that justice is not to simply pull the rug out from underneath the millenia-long development of property determinations in the concrete when some outworkings of that development are less than ideal.

Well, of course, the long term effect will be just to raise expenses as well, so the boomerang effects in the marketplace won't raise everyone to that level and keep them there. But THAT's just as true of a $3 raise: it is inherently a short-term improvement, followed by (according to CBO) a net drag on the economy.

This is very speculative, and I don't believe. Corporate profits have risen while wages have stagnated,

Well, I did say that we were simply accepting the CBO results at face value. I too have doubts about some of them, but they are an assumption for this discussion.

The effects on a total national income of an increase in the minimum wage differ in the long term and in the short term. In the long term, the key determinant of the nation’s output and income is the size and quality of the workforce, and stock of productive capital (such as factories and computers), and the efficiency with which workers and capital are used to produce goods and services, (known as total factor productivity). Raising the minimum wage probably reduces employment, in CBO’s assessment, In the long term, that reduction in the workforce lowers the nation’s output and income a little, which means that the income loses of some people are slightly larger than the income gains of others, In the short term, by contrast, the nation’s output and income can deviate from the amounts that would typically arise from a given workforce, capital stock, and productivity in response to changes in the economywide demand for goods and services, Raising the minimum wage increases that demand, in CBO’s assessment, because the families that experience increases in income tend to raise their consumption more than the families that experience decreases in income tend to reduce their consumption. In the short term, that increase in demand raises the nation’s output and income slightly, which means that the income losses of some people are slightly smaller than the income gains of others.

To boil it down, the short term increase comes with rich(er) people curtailing not personal consumption but investment in productivity and output, and in the long term this reduces overall long term wealth generation. Doing a minimum wage hike is asking for more (for some) now and less for everyone later. Now, that might be a good thing. It is not logically impossible. But we cannot pretend that the short term improvements are without long term consequences.

Intentional watering down of the monetary standard (mixing your gold with lead) in the old days was another way to get a short term improvement. It is just about universal human experience that the short term improvement did not accompany a correction of the underlying economic problem, and led in the end to MUCH WORSE problems down the road than the degree of improvement in the short term could justify. I don't think that the minimum wage increase is a DIRECT attachment to the monetary nonsense that we are under (especially, foreign central bank reserves in "dollars"), but it is one more facet to the mess, and doesn't do a thing to address the underlying faults.

Tony, I think addressing the property rights angle is a red herring here. The real issue is that we have an out of control monetary system that is steadily debasing the currency. The minimum wage going up is about like a chronic pain patient getting a higher dose of pain killers. Nothing more. Liberals and neocons refuse to address the spending issues that necessitate our current monetary policy. Therefore there isn't much to talk about since they're like doctors who pointedly refuse to treat the disease because they're only interested in the symptoms.

Mike, you are right that property rights are a red herring here. However, property rights principles are an issue I would like to tackle head on in a little while (maybe a month or three), so I am willing to see some off-track comments on it, as long as they are not complete nonsense to this discussion.

I agree that monetary policy is, along with a number of other factors, leading us down the road toward financial ruin. Throwing minimum wage hikes at it without fixing the problems isn't going to lead to a better long term situation. However, I could be talked into such a hike - even granting that they cause certain ills of themselves - if they were part of the price of ACTUALLY FIXING the mess in the long term. I could see saying "yes, a short-term increase in the pain killers is just masking the pain, but we need to mask the pain while we undertake major surgery." It's throwing morphine at the problem without a pretense as to actually fixing the illness that is offensive.

Phew, for a minute there I thought Tony was agreeing that raising the minimum wage brings net benefit to the economy as a whole! :-) But then I read his whole comment and saw that he was just referring to the illusion of benefit in the short term before the information function of the price system catches up.

Dunsany is using what I think of as the fallacy of Mr. Ford's mattress. (Some econ textbook should pay me for that phrase.) The idea is that all those evil big corporations are socking away their evil profits somewhere or other instead of distributing them justly to the workers and that, if the government just forces them to do so, they will cut open Mr. Ford's mattress and spread around those hoarded dollars, thus doing more good to the poor workers. As usual, the leftist makes a ceteris paribus assumption that is by no means warranted. The assumption is that forcing the companies to do this will leave "all else equal" and thus will have no serious unintended ill effects...just because. Because they allegedly "don't really have to" raise prices, by golly, they won't raise prices. Or not very much. They'll just make Mr. Ford, the evil CEO stuffing it in his mattress, cough it up. Or give him less next year. And that won't have any ill effects except on Mr. Ford's ability to do presumably frivolous things with the extra $$.

Why anyone should accept such unjustified assumptions has always been beyond me.

"Well, I did say that we were simply accepting the CBO results at face value. I too have doubts about some of them, but they are an assumption for this discussion. "

No, they're not. I have no idea why you think that.

"To boil it down, the short term increase comes with rich(er) people curtailing not personal consumption but investment in productivity and output, and in the long term this reduces overall long term wealth generation. Doing a minimum wage hike is asking for more (for some) now and less for everyone later. Now, that might be a good thing. It is not logically impossible. But we cannot pretend that the short term improvements are without long term consequences. "

Right now Americans are hurting, and I don't care if we reduce overall GDP if we help those who are worse off. Almost the economic gains made over the past decade have gone the 1%, and that's a problem that needs to be addressed. I also dispute the premise of your arguments for the reasons I stated above.

Lydia, I have no idea how you got that out of my post. Maybe you should respond to my actual arguments.

"Because they allegedly "don't really have to" raise prices, by golly, they won't raise prices. Or not very much. They'll just make Mr. Ford, the evil CEO stuffing it in his mattress, cough it up. Or give him less next year. And that won't have any ill effects except on Mr. Ford's ability to do presumably frivolous things with the extra $$."

It's a matter of competition Lydia. Corporations compete with each other and attempt to keep prices as low as possible. The only way for them to decide to force their customers to pay for losses caused by things like the minimum wage is by colluding with each other in some sort of oligopoly.

Oh, Dunsany, there are all kinds of other things they can do that will hurt the "little guy." Like, y'know, hiring fewer workers. Raising prices is just one possibility. And, yes, they are in competition to keep prices low, but won't you be surprised if it turns out that taking the money out of the rich "bad guys" (to use a polite phrase), which you are assuming is going to be the main, not to say the only significant, effect, turns out not to be the way they decide is most competitive? And maybe the little guy is harmed after all? Nah. Can't be. Because the CEOs are getting paid "too much." And that is where I got that from your comment.

Tony: We also don't know to what extent the CBO made unwarranted assumptions for their analysis, but they are charged with being neutral and there are a lot of smart people that work on these questions, so let's postulate for the moment that their estimates are plausible and within the realm of reasonable conclusions.

Dunsany:

This is very speculative, and I don't believe.

Tony: Well, I did say that we were simply accepting the CBO results at face value. I too have doubts about some of them, but they are an assumption for this discussion.

Dunsany:

No, they're not. I have no idea why you think that.

Dictionary.com:

Postulate: suggest or assume the existence, fact, or truth of (something) as a basis for reasoning, discussion, or belief...

Dear, delinquent Dunsay: This here is a blog, run by a team of conservative Christian authors. A blog goes by whatever rules the blog owners decide. If you think the rules stink, you are free to go elsewhere. In this discussion, I put it that we postulate CBO's conclusions as reasonable. Therefore, in this particular discussion that's what we go by. In other discussions, we can pick them apart and show their flaws. In this one, we are trying to decide whether the minimum wage hike can be a just law GIVEN what CBO says. If that's not a discussion that you enjoy, don't participate.

You may think CBO's conclusions are not reasonable. You might respond to that situation by starting a blog in which you show why they are not reasonable. Go ahead. Someday I might even look in. Actually, to some extent I might just agree with you, and help out your argument. That would constitute a different discussion, with a different point, than this one.

Got it?

Right now Americans are hurting, and I don't care if we reduce overall GDP if we help those who are worse off. Almost the economic gains made over the past decade have gone the 1%, and that's a problem that needs to be addressed. I also dispute the premise of your arguments for the reasons I stated above.

Dunsany, would it be fair to characterize your position as being roughly comparable to "Who gives a damn if it is just or not, it is good for poor people so that's a good enough reason to do it"? If that accurately captures your thought, then a person might conclude that you are perfectly willing to see a little bit of injustice be done for the sake of a greater good. Or, more generally, do a little bit of evil in order that good may come of it.

Alternatively, it may be that you don't think that knowingly causing 500,000 people to lose their jobs constitutes doing an injustice. After all, a CEO at GM might think that raising the profitability of the company overall - and workers' wages - by cutting 10,000 jobs at 5 plants does not constitute an injustice, either. So, that's another way to consider the options.

But either way, it would be nice to see you address yourself to these ideas directly, rather than have us guess from peripheral comments that don't really speak much to the issue.

Tony, your system of justice is completely ad hoc and I do not accept it.

"I don't recognize property rights in a Lockean sense, if by Lockean you mean that property rights arise by a social agreement to observe certain procedural rules of distribution and possession. I don't think that property arises by reason of agreement. Rather, I think that material property arises by way of principles that are logically (not temporally) prior to society, namely man's nature as rational and free, his capacity for self-direction, and his bodily reality. These make it RIGHT for a man to take hold of things for his good, to subject them to his dominion, and this rightness of action (expressed in dominion) is the essential foundation of his rightness of possession. That it is "right to do" something is what grounds his "right" to be not interfered with in pursuing the conditions to do something. The positive meaning of right in right moral action precedes and gives rise to the negative meaning of "right" in the social sense of not being interfered with. Social recognition of the latter condition is, precisely, consequential to the logically prior right which exists whether society notices it or not. "

It's fine if you to believe this, but I don't recognize that it is right for "man", by which I assume individuals, to control property, and that we must recognize their right to do so because it is inherently good for us to do so. You're free to think that, but I see no reason to agree with you. I'm actually a determinist so I find the idea that man is naturally free absurd, and I also think that most psychological research shows that humans are not rational either. They are subject to status quo bias, to tribalism, and all sorts of international thinking. So your position starts off with false premises and then builds an ad hoc construction using them.

"You may think CBO's conclusions are not reasonable. You might respond to that situation by starting a blog in which you show why they are not reasonable. Go ahead. Someday I might even look in. Actually, to some extent I might just agree with you, and help out your argument. That would constitute a different discussion, with a different point, than this one.

Got it? "

I understand that you do not wish to actually have a discussion on those issues, which is fine. This is your blog, and if you want to protect your argument by refusing to discuss the premises on which it is based you can. That doesn't mean I'll take you seriously, but feel free to ban me and I'll stop coming here.

Dunsany, if we are determined then there is no point to arguing just or unjust, nor for arguing better or worse, good or bad, improvement or degradation, from this or any law. It is foolish to argue law at all. It is also pointless to argue philosophy, because anything we say about it is just determined anyway, nothing we say can advance "knowledge" about anything because we are just determined to say those things even if they are completely irrational. And there is no reason to think that the world has "reasons" for what happened, that is just a bias we have built into us that determines that we look for reasons as if they were there. And there is no reason to credit "science" with actually finding real causes of events and behavior, because that's just another built in determined behavior of ours that doesn't really approach to truth, all it does is satisfy a "truth-seeking" brain process that wants there to be truth and to see it even where no truth exists. So also there is no reason to credit the science you use to find that we are determined.

Dunsany does not believe that conversation is a possibility; so let action follow principle with this heckler.

Tony, speaking very generally, my view of just wage is that which is entered into by free agents in a contractual manner: remuneration for tasks accomplished. Sometimes the contract is rather informal or implicit; always the object to be labored at must be permitted.

When folks talk of wage slaves they forget that even in post-crisis anemia America offers rich possibilities to the enterprising, the determined, the insightful, the reliable man, the loyal man.

That said, there have been ample causes for the honest laborer to wonder indeed about how freely his contract was entered into, when he is just one against the whole weight of the corporate resources. Private labor unions are more than defensible organizations. Historically, many capitalists have been rapacious and dishonest, ready to wield influence in government, or superiority of lawyering, that they may secretly restrain labor's liberty of contract.

Monopolist practices must be guarded against as well. Silicon Valley's recent admissions in court of collusion to restrain executive and engineer competition for salary is ominous stuff. Likewise, the imaginary benefits and profits that trendy green firms have projected, in order to gain government subsidy for their operations, in addition to being an abuse of taxpayer capital, unjustly enervate labor's liberty.

Silicon Valley bleats for more high-skill immigrants on visas, even while it connives at restricting the market increase of high-skill salaries; apparently forgetting that the free market way to attract more labor is to pay labor more. These firms would rather that the government help them out with a larger supply of (conditional and dependent) labor, than remunerate better to attract more labor. (By contrast, the old unsexy traditional energy industry gets men to come to the Dakotas to frack by paying them huge salaries.)

Again speaking generally, my observation has been that with most abuse, fraud, or usurpation against labor by capital, the gains have been gotten with the acquiescence, if not the active collusion of government.

A smaller, more limited government would of course mitigate these threats against labor. Dealings between labor and capital are freer and more prosperous under conditions of rule of law. But alas! we have gone and replaced rule of law with rule by men for most of several solid generations in a row now.

I think laborers and their contracts are more free of coercion in Michigan now that we passed a right to work law. They aren't forced to join unions. And the unions did everything they possibly could to stop it, believe me. They even tried to pass last-minute meta-contracts requiring employees to pay dues between the passage and the effective date of the right-to-work law that would have lasted for _ten years_ and that might have legally skimmed under the grandfather clause in the right-to-work law. They have coerced home-care workers taking care of their own family members to pay union dues by colluding with the state government to create a phony state employment agency with which they could "negotiate." Their coercive tactics are legion.

The dominance of modern labor by public sector unions is a small calamity for the country. Arguably no institution possesses a comparable privilege to act against the commonweal with such impunity as these.

In other words, I tend to support right to work reforms; but I do try to emphasize what I think is a clear difference in charter between private and public unions. In the former, labor of a private enterprise organizes collectively to bargain with management for a share of the firm's profits. In the latter, two interested parties negotiate to plunder the taxpayer, who doesn't even get a seat at the table.

Well, I could not agree with any general notion that unions that are not public sector are non-coercive and are in general a good. The AAUP is not a public-sector union but is very coercive. I agree that public-sector unions have even worse consequences, but they are not the only problem. Whenever a union, whether technically public-sector or private-sector, is given the power to coerce all employees in a particular field to pay them money for the "privilege" of working for the employer, we have a problem. That is why right-to-work laws rightly, in my view, apply to non-public-sector coerced union fees as well.

What do you mean by coercive? Suppose a private union reaches an agreement with an private employer and that employer agrees only to hire union workers. The people that want to work there have to join the union, but the agreement in question was reached by private organizations negotiating with each other and coming to a mutual agreement. This is why "right to work" laws are fundamentally unconservative, they seek to prevent workers from getting businesses to agree to contracts that benefit them using the coercive power of the state. It is true that it is "socially coercive" to get a company to form a closed shop, but this kind of social coercion is present in every sphere of life and if you accept that it is no different from government coercion you will be left defending some fairly insane results.

"Dunsany, if we are determined then there is no point to arguing just or unjust, nor for arguing better or worse, good or bad, improvement or degradation, from this or any law. I"

I just don't agree with that Tony. You're free to defend that claim if you want.

For one thing, it is coercive because federal labor laws prevent the employer from unilaterally refusing to bargain with the union, refusing to enter into a closed shop agreement, firing strikers, and hiring replacements. So the federal government supports the unions who are seeking to coerce the employer by threats of strike to conspire with the union to force other workers to give the union money.

What do you mean by coercive? Suppose a private union reaches an agreement with an private employer and that employer agrees only to hire union workers.

I oppose closed-shop practices, and generally favor right to work laws. That said, I do harbor a reservation.

I also sort of oppose "at will" so-called contracts for labor. My feeling is that they put too much vulnerability / risk into an employee's situation, and too much exploitative power / volatility control into the employer's. In my opinion an "at will" arrangement is more like no contract, you put up with whatever the management says until you can't take it anymore. Of course management is in the same boat, theoretically, but that's never really the case because it is always true that an investor can afford to allow his capital to rest a while more than the laborer can afford to rest.

In my view, private unions should negotiate the GENERAL framework of standard approaches to wages, working conditions, benefits (like health, retirement, fringe), and so on. And then each employee, with the union's assistance, should negotiate separately and individually with the employer for himself, probably on an annual or bi-annual basis. The individual employee's contract with the employer usually would have performance bonuses and penalties so that he might earn more than others in the same position, or less if he is not a good worker, or negotiate other considerations that he wants to bring up. It would also have standard provisions for the employee and employer to end the contract "early", i.e. to not finish out the period - standard penalties for not giving sufficient notice - such that the longer an employee was with the company, the longer notice was required from the employer to let him go without penalty - probably a week for each year of service. And the employer would have to provide similar notice to the employee if he does not intend to renew the contract - and vice versa. You might see that I find it REALLY, REALLY offensive when an employer walks up to a long-term employee and says "you are fired, you have 15 minutes to clear out your desk, and we will escort you off the premises", with a 2-week paycheck.

That's what I think is the right balance between labor and management, and the right place for unions. Unions have a real place, but they should NOT control the contract each employee makes with the employer, that means that each employee is faced with the "take it or leave it" that the union negotiated, rather than what he might negotiate himself. That's not true negotiating power, and yes, it is indeed coercive. Just saying that it is a "take it or leave it" situation shows that it participates in EXACTLY the same sort of ill that brought about the needs of the unions to begin with. I can see the union providing the "starting point" of a contract, a framework with typical terms, and then let each employee deciding where he wants to depart from the standard terms to do something more suited to his own situation. Maybe he wants less pay but more benefits, maybe he wants more opportunity for overtime but less travel, he should be free to get a DIFFERENT deal than the standard deal.

I work alongside of people who are protected by unions, and I find it offensive that (a) the poor workers are protected a LOT by rules that bind the employer's hands, so much so that it seems like the rules are intentionally designed to protect poor worker behavior rather than protect against unreasonable management behavior, and by (b) the fact that the employer almost can't reward a laborer who is worth twice the average (puts forth twice the average output) by pay that shows how much he is valued.

Another problem with closed-shops is that it violates freedom of association principles. If a union cannot get people to belong because they WANT to belong, there is more wrong there than that the employer is a meanie.

It's fine if you to believe this, but I don't recognize that it is right for "man", by which I assume individuals, to control property, and that we must recognize their right to do so because it is inherently good for us to do so. You're free to think that, but I see no reason to agree with you. I'm actually a determinist so I find the idea that man is naturally free absurd, and I also think that most psychological research shows that humans are not rational either. They are subject to status quo bias, to tribalism, and all sorts of international thinking. So your position starts off with false premises and then builds an ad hoc construction using them.

Me:

Dunsany, if we are determined then there is no point to arguing just or unjust, nor for arguing better or worse, good or bad, improvement or degradation, from this or any law...And there is no reason to credit "science" with actually finding real causes of events and behavior, because that's just another built in determined behavior of ours that doesn't really approach to truth,..."

Dunsany:

I just don't agree with that Tony. You're free to defend that claim if you want.

I wasn't merely staking a claim, I was making an argument. I was taking your position as a determinist and showing that it leads to a problem - that it leads to not being able rely on the science that you imagine leads you to determinism. If you think that argument fails for some reason, I am ready to hear the reason. Your repeated "I don't agree with that" and "I don't recognize" and "I see no reason to agree with you" comments don't actually initiate an argument, they just register opposition. I am OK with your disagreeing, but I want to see an argument.

And in pursuit of that: if we are determined in our behavior, then whatever behavior we do is determined and is therefore neither just nor unjust, as an oxygen atom leaving a water molecule to bond to iron is neither just nor unjust. Determinism seems to imply behavior that is devoid of freedom - as you imply - devoid of choice, and therefore devoid of being characterized as praiseworthy or blameworthy for its relation to a moral standard, for it is a moral standard that states that I ought to do something which I either may do or may not do by choice. I have never heard of someone who accepts determinism who ALSO supports some notion of justice, but apparently you do:

Tony, your system of justice is completely ad hoc and I do not accept it.

And, by the way, my system is based on premises you don't accept - that's not the same as "ad hoc". Not even close. Unlike most people's inchoate notions of justice, mine is quite the opposite of ad hoc, it is rooted in a very deep principle that applies broadly throughout man's behavior. It's OK to dispute that principle - that there is something rightly understood to be "human nature" - but get your thesis straight, so that you can either argue why mine is erroneous, or present your own basis for justice and argue why yours is more right than mine.

If your notion of justice leads to the conclusion that there is no such thing as private property, then I don't see why you would support a minimum wage law at all, because that law is in support of private property.

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